Strategic partnerships and technological investments mark this year’s cream of the crop.
With deep knowledge of local markets, subcustodian banks are the anchor of the investment value chain, playing a critical role in facilitating cross-border investment. Besides providing a broad range of comprehensive transaction settlement and custody services, sub-custodians utilize their local market knowledge to expand client engagement by providing offerings that implement operational efficiencies and apply technological resources. And they serve as trusted advocates to help clients navigate the ever-changing regulatory landscape.
This year marks the 20th year that Global Finance recognizes the World’s Best Sub-custodian Banks, across seven regions and 82 countries, territories and districts, for their commitment to managing the increased diversity and complexity of financial instruments to provide world-class custody services. This commitment is essential in all jurisdictions, particularly for developing and emerging markets as they seek to attract investment to grow their economies. Because of the enormous investment in technological infrastructure that sub-custody services require, some participants are forging strategic alliances with larger global players, leveraging vast networks and resources to expand into new markets, achieve economies of scale and enhance service offerings that include support for digital assets.
Methodology: Behind the Rankings
In selecting the institutions that reliably provide the best services in 82 countries, territories and districts in seven geographic regions, Global Finance’s editorial board considered market research, input from expert sources and information from the banks themselves.
Criteria included customer relations; quality of service; competitive pricing; smooth handling of exception items; technology platforms; post-settlement operations; business continuity plans; and knowledge of local markets, regulations and practices.
STANDARD BANK CORP.
Standard Bank, again the winner for Africa, operates the largest custody network in sub-Saharan Africa with an extensive franchise covering 16 countries, holding more than $400 billion in assets under custody (AUC). The bank offers consistent product and service delivery to provide a seamless experience in every market it serves on the continent, through its single custody platform with centralized services from its South African headquarters.
As the country winner in Ghana, Kenya, Mozambique, Nigeria and South Africa under its Stanbic brand, Standard Bank’s model reflects its competitive advantage in providing uniform sub-custody service across the region, as it does with all elements of its business.
Its deep network of custody businesses across Africa and its comprehensive market coverage also contribute to high levels of client acquisition and retention. The bank has a broad range of domestic and foreign clients, including seven top 10 global custodians, four top 10 broker-dealers in sub-Saharan Africa and five of the top 10 pension funds.
Maintaining such a robust level of service requires an extensive technology infrastructure. Standard Bank invested more than $600 billion in 2021 to improve operating efficiency and client interactions—including an upgrade to its TCS BaNCS Cloud platform, scheduled to go live in October. The bank is also developing data solutions to provide real-time access to pension clients, enhanced reporting and other services.
A leading advocate in the market, Standard Bank is committed to growing the African economy by facilitating domestic and foreign institutional investment through its custody franchise. Strong industry leadership is evident through its affiliation with 64 industry forums where developmental initiatives to the securities market are conceptualized and advanced, and by its active partnership with regulators in the African market to introduce new products and capabilities.
A pioneer in securities lending, Standard Bank was the first to market in South Africa and led the adoption in Nigeria, with similar initiatives underway in Kenya. While in Zimbabwe, the bank was a key participant in lobbying the market to adopt the country’s central bank to settle all central securities depositary trades. Additionally, the bank is guiding Ghana’s planned overhaul of its central securities depository systems.
Standard Chartered is aggressively building on its leading global custody platform with a new service model to improve the client experience and to drive innovation and growth through partnerships. These initiatives helped the bank retain its position as the Best Sub-custodian in the Asia-Pacific region. The bank is also this year’s countries, territories and districts winner for Hong Kong, India, Indonesia, Pakistan, Philippines, Sri Lanka and Vietnam.
The bank has expanded its product offerings in each of these markets, including digitizing the account onboarding process and integrating the bank’s corporate action platform with the core custody platform across 28 markets. New applications include trade initiation, which gives clients an alternative channel for trade instructions, and corporate actions, which provides better visibility on these events.
Standard Chartered’s Client Solutions model, launched in 2021, combines client service, account opening, account management and client onboarding into a single client-facing function providing a consistent post-trade servicing model across its footprint. The format greatly simplifies all client-service functions across one team to leverage market expertise and deliver an enhanced client experience aligning with the bank’s global standards.
Introducing innovative products remains a priority for Standard Chartered, which continues to lead the industry in advancing the digital asset infrastructure with the launch of Zodia Custody—a global cryptoasset custody offering developed by Northern Trust and SC Ventures, Standard Chartered’s innovation arm. The platform permits institutional clients to invest in digital assets with custody services safely and responsibly using Standard Chartered’s and Northern Trust’s best practices.
Central and Eastern Europe
With a 30-year tenure in the region, UniCredit Global Securities Services is the leading sub-custodian in Central and Eastern Europe (CEE). The bank dominates the market with industryleading infrastructure and extensive market knowledge to provide consistently high levels of client service in the 11 markets it serves.
UniCredit has kept the title of Best Sub-custodian Bank in CEE and the top sub-custodian in Bosnia and Herzegovina, Bulgaria, Hungary, Serbia and Slovenia, where it holds at least 40% AUC in each country and a commanding 85% AUC in Serbia.
Client-centricity is at the heart of the bank’s service model, and well-trained teams deliver a boutique approach resulting in tailored offerings implemented efficiently and flexibly. The approach permits UniCredit to quickly adapt to client needs and to help navigate the changing regulatory landscape through close collaboration with market regulators, advocating on behalf of clients and shaping the broader industry in the bank’s markets.
The level of responsive service has translated into high satisfaction and long-term client retention while positioning the bank to win new mandates. Additionally, the sub-custody platform is integrated with the bank’s Transactions and Payments division, enabling broader service coverage.
UniCredit emphasizes the development of new products, IT infrastructure improvements and highly automated processes to reduce risk. The bank will strengthen its platform further with a transition to the BaNCS system that will enhance operational workflows, foster greater flexibility with custom offerings and ensure compliance with ever-changing industry standards. The bank plans to complete its rollout to all markets by the first quarter of 2023.
The bank also holds a competitive advantage by offering two securities-servicing options involving a direct servicing model in each of its markets. Using an Austrianbased hub model, UniCredit Bank Austria is the sole counterparty acting under a single master agreement across its markets, letting clients access new markets more efficiently via a centralized structure.
On the strength of Citi’s global custody network, Citi retains its position as the Best Sub-custodian Bank in Latin America by providing world-class services to expand its leading franchise covering seven countries in the region with a robust infrastructure that involves a proprietary system developed specifically for custody services.
The bank offers an exceptional suite of post-trade transaction and settlement services, including an extensive library of customizable reports, a market information repository and transaction-instruction capabilities. An integrated approach lets Citi’s Latin American operations offer clients significant efficiencies and robust services. The resulting competitive advantage has led to dominant market shares in AUC in many markets, with Citi earning country winner awards in Argentina, Brazil, Colombia, Mexico, Panama and Peru.
With the bank’s long tenure in Latin America and its wellestablished franchise, Citi is committed to shaping the industry in each country in which it operates, maintaining ongoing communication with local regulators and participating in industry committees to advocate for evolving investor requirements to improve market access.
Among its regional improvements, the bank adopted and implemented DocuSign in Argentina and Brazil and advocated for further adoption in its other markets. Additional service enhancements in Argentina include developing an automated control on regulatory parking periods for some transactions, promoting the benefits of electronic proxy voting and launching a web-based pre-matching tool to provide counterparties with transparency on trade settlement details and other instructions.
In Brazil, the registration of nonresident investors became more efficient with enhancements to the bank’s smart portfolio application form. Citi contributed to initiatives with the Colombia Stock Exchange and issuers to establish a standardized tax environment for foreign investors. Meanwhile, Citibanamex successfully implemented a Swift connection with the central securities depositary for settlement instructions and is working with regulators to further refine the repo and securities lending markets. Seeking to position Panama as a strong, centralized regional securities provider, the local central securities depositary, Latin Clear, consulted Citi Panama on initiatives involving cash settlement with markets in Central America.
FIRST ABU DHABI BANK
The 2021 strategic alliance of First Abu Dhabi Bank (FAB) with State Street greatly expanded FAB’s custody network in five new countries. It now covers seven markets in the Middle East and North Africa (MENA), including Bahrain, Egypt, Kuwait,Lebanon, Oman, Saudi Arabia and the United Arab Emirates (UAE). And it plans to expand into Qatar by 2023. With this dominant franchise, FAB has won as the Best Sub-custodian Bank in the Middle East as well as the countries of Bahrain, Kuwait, Saudi Arabia and the UAE.
“FAB demonstrated its commitment to the Middle East by expanding our direct custody offering to seven MENA markets,” says Kashif Darr, managing director and head of Securities Services at FAB. “We are honored by this recognition of our capabilities and in-depth market expertise as we build toward our goal of creating the region’s leading direct custody platform.”
Already the largest custodian in the UAE, with a 50% market share of AUC, the alliance solidifies the bank’s dominant position in the region via the combination of FAB’s leading regional direct custody platform and State Street’s global capabilities, offering MENA-based clients an unrivaled franchise servicing all major assets classes.
Clients now have access to State Street’s entire suite of front-, middle- and back-office capabilities in addition to its extensive data-management and analytics offerings, integrated into FAB’s regionalized suite of securities-services products and regional custody network.
With the backing of one of the largest Canadian banks and global custodians, CIBC Mellon is the winner as the Best Sub-custodian Bank in North America and in Canada, due to its franchise leveraging BNY Mellon’s global network to provide a deep and comprehensive range of services.
The 50-50 joint venture between CIBC and BNY Mellon is a formidable combination, leading Canadian custody with more than $2 trillion in AUC and offering clients access to more than 100 global markets.
“Amid challenging markets and an evolving operating environment, our teams have emphasized strength and stability, all while delivering innovative technological capabilities for our clients,” says Richard Anton, chief operations officer of CIBC Mellon. “The commitment of our people to getting it right every day helps set our company apart.”
The advantage of tapping into BNY Mellon’s custody resources is substantial, particularly with the technology required to support systems that handle enormous volumes of transactions and data. The CIBC Mellon platform can continue developing and enhancing asset-servicing systems by bringing advanced BNY Mellon global technologies to Canada while adapting them to local requirements. Notably, this includes transitioning all clients from a legacy platform onto BNY Mellon’s Global Securities Processing platform, which will continue throughout this year.
The bank is at the forefront of innovation in the digital assets custody sector, where CIBC Mellon services 19 of the 23 retail cryptocurrency offerings available in Canada and responds to increased interest from investors and industry participants in cryptocurrencies by serving as fund administrator for the world’s first retail bitcoin and ethereum exchange-traded funds. The firm continues to collaborate with global and domestic financial services industry stakeholders and leverages BNY Mellon’s digital asset unit to identify and develop potential solutions to support digital asset offerings. CIBC Mellon is highly engaged with regulators to drive the evolution of the custody sector and is an industry leader with initiatives to provide the most advanced settlement-processing services and trade communication. This includes enhancements with straight-through processing capabilities to ensure the seamless and secure transmission of high-risk trade data and the annual implementation of new Swift standards.
Robust governance of the firm’s platform and the franchise is critical, and CIBC Mellon became the only Canadian custodian to achieve certification from the International Organization for Standardization for security and business continuity in 2021.
BNP PARIBAS SECURITIES SERVICES
BNP Paribas Securities Services (BNPSS) operates a leading franchise to provide a comprehensive range of integrated custody and post-trade settlement solutions, with global coverage of 90 markets in 35 countries, territories and districts. With an exceptional network and platform, the bank has built long-term relationships to become the largest custodian in Europe and the fifth-largest globally, amassing $14 trillion in AUC. It has won the award for Best Sub-custodian Bank in Western Europe as well as in the countries of France, Ireland, Luxembourg and the Netherlands.
At the center of the firm’s service model is its advanced NeoLink custody application, where clients can access a suite of tools to manage information and monitor activity with a simple, highly customizable platform that adapts to client needs and includes reporting applications and visibility with online transactions related to custody, cash, transfer agents, fund administration, investment compliance and trustee services.
BNPSS consistently demonstrates high levels of client retention, reflecting its investment in technology to offer cutting-edge execution capabilities combined with an integrated client-service model. The bank structures its model around centralized teams and global centers of excellence to provide tailored and flexible services and deliver a seamless onboarding process through a group of 75 client-service managers.
By actively soliciting clients’ assessments, BNPSS can better engage with them to continue delivering high service levels. Its dominant market share of 40% in France reflects its exceptional service, robust platform and operational efficiency, as evidenced by a 98% straight-through processing rate.